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. Last Updated: 07/27/2016

Retail's Future Moves to the Underground

Moscow City Hall is going underground to solve the city's land shortage, Mayor Yury Luzhkov said at the opening of an exhibition on subterranean construction last week, as the list of major underground shopping projects in the city center continues to grow.

"Our task is to give the city two levels, so that the underground level becomes fit for life, and not occupied by sewers and rusty pipes," Luzhkov said at the opening of the Underground City exhibition at the Manezh Central Exhibition Hall on Wednesday, Rossiiskaya Gazeta reported.

But while some Canadian cities boast whole networks of underground streets and shopping centers, Moscow is not there yet. More than eight years after its opening, Okhotny Ryad remains the city's only major underground mall.

To catch up, the city government is pushing a number of ambitious projects beneath major squares. Work on clearing the square in front of Belorussky Station for a $200 million underground shopping center has already begun, while preliminary construction is underway on an even bigger project beneath Paveletskaya Ploshchad, according to Colliers, which is to let the center.

Construction of a retail center under Pushkin Square, and a tunnel to link Tverskoi Bulvar and Strastnoi Bulvar below Tverskaya Ulitsa, is due to begin in September, Izvestia reported on Monday.

A fourth complex may be built by an Israeli company under Lubyanskaya Ploshchad, with two floors of parking and one floor of retail, said Nikolai Shumakov, the chief architect at underground project specialists Metrogiprotrans, who is working on a proposal for potential investors.

But building around the city's dense metro, heating and water infrastructure presents major engineering problems, as the mayor admitted at Wednesday's opening, noting the city's water pipes were long enough to reach to Kamchatka, while the city's electricity cables could stretch around the world twice.

As much as $45 million of the $156 million budgeted for the Pushkin Square center is to be set aside for repairing infrastructure under the square, Izvestia reported.

"It's incredibly complicated and very expensive," said Maxim Karbasnikoff, head of retail at Jones Lang LaSalle in Moscow. "It can cost between two and four times more than to build aboveground. But these are extremely attractive locations."

He said rising rents might have finally made the projects economically feasible. The Pushkin Square project, for example, has been under discussion for almost a decade already.

Earlier projects to build underground levels below the Arbat and Tverskaya -- allowing traffic to flow through tunnels, while pedestrian streets ran above and below the ground -- were scrapped due to the exorbitant price, said Vyacheslav Ilichev of the Gersevanov Institute of underground construction, which consults on major projects in the city.

In some Canadian cities such as Toronto and Montreal, a series of shopping centers are connected by underground tunnels, allowing shoppers to travel between them without venturing onto the streets in winter.